New rules could complicate Chicago condo sales
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Some condo owners could find it harder to sell their units under tougher new Fannie Mae and Freddie Mac lending standards.
Why it matters: The rules put new pressure on condo associations to stay on top of repairs and financial reserves, making sellers more dependent on the building's overall appeal — not just their condo's — to sell.
Reality check: Fannie and Freddie say the rules will ensure buildings stay on top of repairs, making buildings safer.
Driving the news: As of Aug. 3, sellers can expect a thorough review of the association's financial reserves and documentation of past and forthcoming projects, eliminating the "fast-tracked" review process.
Context: Condo management has come under scrutiny after a Surfside, Florida, condo building collapsed in 2021, killing 98 people.
- Part of the problem was that the building's association delayed maintenance needs, which led to more serious structural issues.
What's next: A potentially more impactful change for condo owners comes in January when associations will be required to keep 15% of their annual budgets in reserves, up from 10%.
- The change is meant to protect buyers from expensive special assessments and other unforeseen costs.
Zoom in: The requirement for more in reserves could mean higher monthly HOA dues or smarter budgeting to prevent tapping into reserves for every big project, Chicago real estate agent Scott Curcio tells Axios.
- "If you're going to sell your unit in 2027, you should be engaging with your homeowners association, making sure that they're aware of these changes and asking them what steps are they taking to ensure that you're going to meet all the guidelines," Curcio explains.
Yes, but: Smaller condo buildings with 10 or fewer units no longer require a formal review, making them easier to finance and a better option for some buyers.
The bottom line: No more avoiding HOA meetings and crossing your fingers that the roof stays intact.
- Make sure your condo association is in line with Fannie and Freddie.